Many people assume that investing is only for the rich, when one looks at world famous investors such as Warren Buffet, Michael Bloomberg, Carl Icahn and George Soros. However, is it true that investing is exclusively for the rich while impossible for the larger middle-class group of people?
Such a mindset needs to be rethought as investing is not an activity for the rich but rather a means to becoming rich. Investing can be potentially more beneficial than keeping your money idle in bank savings. Through investment, you will have the opportunity to grow your money at a rate higher than what bank savings can offer. Furthermore, inflation erodes the value of money over time and could outweigh the small gains on savings account offered by banks.
Investing is a way to increase wealth
According to BBC, rich people are more inclined to investing. One such examples is Joshua Coleman whose family sold their telecommunications company based in Chicago for US400 million in 2004. Instead of splurging on luxury goods, Joshua chose to buy market shares, acquire other companies, and dive into aircraft leasing business.
Tips to start investing on a small budget
David Rae, a contributor of Forbes, gave these some tips on how middle-income earner can start investing.
- Start investing with small amount of money
An investment does not always need to start big. Set aside some money every day and eventually it will be enough for your first investment outlay. Nowadays, initial investments as low as SGD200 are offered by P2P platforms including Kapital Boost.
- Start early
Start investing as early as practicable. You may even do so as a student, which will enable you to get more experience and discover more investment opportunities. Furthermore, starting early offers added advantages as explained below.
1. Increased earning potential through time
Time is the main benefit of starting your investment early. You will have the opportunity to earn more than those who start later. For example, if you begin investing with the amount of $1000 and your monthly investment is $100 from 22 to 67 years old, you will get around $1,145,340 if the return is 10% per year. But when you start at the age 27, you will get only around $691,379. As you can see, five years of waiting give a significant different to your retirement nest egg.
2. Long-term passive income
The next advantage is the long-term passive income. Through investment such as crowdfunding, you will receive a potential profit or reward when you invest your money in the crowdfunding projects. In Kapital Boost, you can involve and invest in the crowdfunding projects with an attractive return up to 24% per year.
3. Enhancing your investment acumen
Time enables you to acquire experience and knowledge about investing. This increases your acumen in analyzing opportunities in order to make wise investment decisions.
4. Better quality of life
Investing can be an excellent way of building your nest egg. The longer time you have in doing so could increase your financial preparedness to overcome unforeseen circumstances in the future.
So, are you still thinking that investing is only for the rich?